China gift crackdown hits watches, booze but foreign brands hold on

January 15, 2013|Reuters

By Adam Jourdan

SINGAPORE, Jan 15 (Reuters) - A Chinese government crackdownon lavish spending by officials has pushed expensive liquor andhigh-end watches out of favour in the luxury gift-giving market,a survey from the Hurun Report, known for its annual China RichList, showed on Tuesday.

Top alcohol maker Kweichow Moutai Co Ltd saw itsclear 'baijiu' liquor -- widely imbibed at official banquets andpresented as a premium gift -- fall to 13th place on the "bestbrand for gifting by men" table, down from fifth last year whenthere was a single, mixed-gender table, according to the report.

Swiss watchmaker Longines was the only watch brand to makethe "gifting by men" list at number 15, replacing Rolex, whichwas ninth in 2012 but dropped off the list altogether this year.The report surveyed 551 Chinese with personal wealth of 10million yuan ($1.6 million) or more.

The results follow a government crackdown, launched in Marchlast year, on using public funds to buy luxury items such asbaijiu, which can cost several thousand yuan per bottle. InDecember, alcohol was banned at military events.

"Watches and liquor have been influenced by governmentpolicies and have been pulled down by a change in leadership.It's traditionally been that in government there are people whocan influence policy in your favour," Hurun founder RupertHoogewerf told Reuters.

State media have reported a wave of corruption andabuse-of-power cases since November's senior leadershiptransition in the ruling Communist Party. In one case, anofficial was sacked after Internet photos showed him wearing anumber of different luxury-brand watches.

The official Xinhua News Agency reported in late Decemberthat the luxury ban on officials had hit the share prices oflisted liquor distillers.

Market leader Moutai had 12.5 billion yuan wiped off itsmarket value after the new regulations were announced.

Moutai's fall meant there was not a single Chinese brand inthe top 10, and only one in the top 15 on the men's gift list.

France dominated with six brands out of the top 10 in themen's list and four in the women's, including luxury accessoryand apparel makers Louis Vuitton and Chanel.